Expand stock issuance to prepare for raising funds to buy more Bitcoin
The well-known business intelligence software company MicroStrategy recently submitted a proposal to the U.S. Securities and Exchange Commission (SEC) to significantly increase the number of ordinary and preferred shares it can issue, in order to raise funds to acquire more Bitcoin. According to the official filing, MicroStrategy will increase its Class A ordinary shares from the original 330 million shares to 10.33 billion shares, and increase its preferred shares from 5 million to over 1 billion shares, reserving more room for future issuance of stocks or bonds.
Source: StreetInsider MicroStrategy submits proposal to SEC for a special shareholders' meeting
This proposal is seen as the execution basis for MicroStrategy's '21/21 Plan'. This plan was publicly announced in October, with the aim of raising $21 billion in equity and $21 billion in fixed-income product funds over the next three years, totaling $42 billion, to purchase Bitcoin. MicroStrategy emphasizes in official documents that the increase in the number of shares issued is not only for this plan but will also be used for the company's broader capital utilization in the future. With MicroStrategy frequently raising funds to buy Bitcoin through issuance and bond issuance in recent years, the market expects that if the proposal passes, the company is likely to further consolidate its position as 'Bitcoin's first stock'.
Realizing shareholder value: Bitcoin strategy shines again
MicroStrategy founder and Bitcoin strategy leader Michael Saylor also boldly declared his 'shareholder profit theory' on social media. He revealed that the company's finance department recently generated about 0.72% earnings from Bitcoin, equivalent to about 3,177 Bitcoins, which, based on the recent Bitcoin price of about $94,000, translates to approximately $299 million in profit. Saylor referred to it as 'a Christmas gift for the company's shareholders'.
Source: X Michael Saylor stated that the success of his Bitcoin strategy is 'a Christmas gift for shareholders'
During the execution of the '21/21 Plan', MicroStrategy frequently increased its Bitcoin holdings, acquiring 42,000 Bitcoins in December alone, at a cost of about $4 billion. According to data from Saylor Tracker, MicroStrategy and its subsidiaries hold a total of 444,262 Bitcoins, with a total cost of about $27.7 billion, averaging $62,226 per Bitcoin. Although Bitcoin recently fell slightly amid the Federal Reserve's hawkish rhetoric, the company's stock price has still quadrupled this year due to the rise in Bitcoin, providing substantial returns for investors.
Source: Saylor Tracker Overview of MicroStrategy's Bitcoin Holdings
Intensive bond issuance and stock expansion, a dual approach to increase positions
Not just 'Bitcoin gains', MicroStrategy has also been raising funds in the market, successfully raising $13 billion in equity and $3 billion in bond funds in just two months through stock and convertible bond issuance. Most of these funds are used to execute the company's Bitcoin purchase plan, causing its Bitcoin holdings to increase rapidly. With the recent proposal submitted for a special shareholders' meeting to increase shares, it is evident that MicroStrategy is attempting to pave the way for significant future investments.
Regarding this 'extreme' Bitcoin deployment strategy, Saylor has repeatedly expressed his belief that Bitcoin has long-term appreciation potential and can become the best reserve for corporate funds. The company also emphasizes that holding Bitcoin not only provides shareholders with higher returns but can also generate stable cash flow through various financial instruments (such as derivatives or income-generating structures). The new announcement further indicates that its annualized Bitcoin return target is expected to reach 6% to 10% by 2025 to 2027.
'Bitcoin's first stock' continues to lead, the heat of the crypto industry is rising
In summary, MicroStrategy's comprehensive strategy of 'stocks + bonds + Bitcoin' shows that the company is continuously deepening its layout in the cryptocurrency industry: on the one hand, through professional financial operations and issuance proposals, it consolidates financial flexibility; on the other hand, it injects more Bitcoin exposure to attract investors to share profits. For shareholders optimistic about Bitcoin's long-term value, MicroStrategy's decisiveness is undoubtedly a significant advantage.
However, this strategy also faces potential risks: Bitcoin is highly volatile, and if the market reverses, MicroStrategy may face financial pressure due to a rapid decline in asset value. Additionally, after expanding capacity, the company's financial leverage will also rise, necessitating caution regarding cash flow risks. Nevertheless, MicroStrategy continues to move forward boldly, providing a notable model for other companies to follow.
In the future, whether MicroStrategy will have another larger-scale Bitcoin purchasing action will depend on whether the proposal passes in the special shareholders' meeting, which will be a focal point of market attention. If successfully implemented, the increase in its Bitcoin holdings and corporate market value will inevitably have a profound impact on confidence and trends in the crypto industry.
Further Reading
MicroStrategy spends $17.5 billion on Bitcoin! Economists criticize: It's essentially a Ponzi scheme
BTC concept stocks hit the Nasdaq 100! MicroStrategy sets a new record, does Bitcoin gain mainstream financial recognition?
Beliefs should change! MicroStrategy: The U.S. should sell gold and buy Bitcoin, hinting at large-scale purchases again
[Disclaimer] The market is risky, and investments should be cautious. This article does not constitute investment advice, and users should consider whether any opinions, perspectives, or conclusions in this article align with their specific circumstances. Investing based on this is at your own risk.
'Preparing to buy more Bitcoin! MicroStrategy expands stock issuance, how to achieve a win-win for BTC and shareholders' This article was first published in 'Crypto City'
